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Splitting pensions to stay within £85k limit - suggestions?

zico
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Splitting pensions to stay within £85k limit - suggestions?

#136625

Postby zico » May 3rd, 2018, 5:35 pm

Does anyone have any thoughts on best/easiest companies to use to set up new DC pots?
I'm currently with Scottish Widows, but have more than £85k into 2 schemes with them, so want to use at least a couple of other firms for my pension pots, just in case one of them goes under.

swill453
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Re: Splitting pensions to stay within £85k limit - suggestions?

#136628

Postby swill453 » May 3rd, 2018, 5:45 pm

Assuming your pension isn't held as pure cash, the £85K limit doesn't actually apply.

There may be other reasons not to hold all your pots with the same provider, but the £85K limit isn't one of them.

Personally I've got no qualms about holding my entire SIPP, more than that amount, with a single provider.

Scott.

zico
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Re: Splitting pensions to stay within £85k limit - suggestions?

#136641

Postby zico » May 3rd, 2018, 6:35 pm

Below is what I found from FSCS. I've bolded what seems to be an important condition - and one that I don't properly understand.
What I get from this is that it's only if you're already using an annuity that your pension pot is 100% protected, whatever the amount.

Would be grateful for other views on this, as it would be much more straightforward to simply use one provider, but it does seem to me that there's a risk of doing this if the provider were to go bust.


https://www.fscs.org.uk/what-we-cover/p ... t-savings/

Compensation limits for pensions (retirement savings)

The compensation limit which applies to your pension will be dependent on the way your pension has been invested.

Deposits: if you choose to deposit your pension funds in a bank, building society or credit union you are protected up to £85,000 per person per firm.

Investments: If you choose to place your pension funds directly in investments (other than insurance products), you are protected up to £50,000 per person per firm. This limit will also apply if your claim involves the mis-selling of a pension.

Retirement income: If you are already drawing a set retirement income from your pension pot from a life insurance contract, such as an annuity, your income is protected by FSCS to 100% if anything happens to your provider.

Pension Life Savings: If you are still building up your pension pot, 100% of your pot will be protected if it's directly managed under a life insurance contract. This would include personal pensions and stakeholder pensions, but not defined-benefit workplace pension schemes, which may be instead covered by the Pension Protection Fund.

Investment Life Policy Savings: These are long-term life insurance policies which have a savings element, such as endowment policies or investment bonds. Any investment life policy savings you hold are protected up to 100% with no upper limit.

Death or Incapacity: FSCS will pay your claim to 100% if it arises from death or incapacity, if anything happens to your provider.

swill453
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Re: Splitting pensions to stay within £85k limit - suggestions?

#136644

Postby swill453 » May 3rd, 2018, 6:50 pm

zico wrote:Would be grateful for other views on this, as it would be much more straightforward to simply use one provider, but it does seem to me that there's a risk of doing this if the provider were to go bust.

You need to be clear on what you want protection against. If a DC pension provider goes bust, your investments aren't at risk. They're held in a nominee account with your name tagged on, and are not available to the provider's creditors.

You might lose access to them for some indeterminate period until things get sorted out, but long term you won't lose them.

The £50,000 FSCS protection might come into play if there is fraudulent activity at your pension provider, and someone there somehow manages to disappear with your investments. Personally I think the chance of this happening at one of the major players is so small that I ignore it.

Scott.

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Re: Splitting pensions to stay within £85k limit - suggestions?

#137113

Postby ursaminortaur » May 5th, 2018, 3:14 pm

swill453 wrote:
zico wrote:Would be grateful for other views on this, as it would be much more straightforward to simply use one provider, but it does seem to me that there's a risk of doing this if the provider were to go bust.

You need to be clear on what you want protection against. If a DC pension provider goes bust, your investments aren't at risk. They're held in a nominee account with your name tagged on, and are not available to the provider's creditors.

You might lose access to them for some indeterminate period until things get sorted out, but long term you won't lose them.

The £50,000 FSCS protection might come into play if there is fraudulent activity at your pension provider, and someone there somehow manages to disappear with your investments. Personally I think the chance of this happening at one of the major players is so small that I ignore it.

Scott.


If you are still worried about the small chance of fraud or the temporary loss of access a broker failure might produce then of course you can just start a new SIPP with someone else.

There are quite a few fairly cheap SIPP vendors who either charge a fixed fee eg interactive investor or a percentage fee Hargreaves Lansdown, A J Bell Youinvest etc

Which is the best for you will depend upon your investing style with some being best for direct shareholdings whereas others are better for funds, some being able to fully reclaim witholding taxes for USA (and possibly other overseas investments) and others not being able to.

A good starting point is probably

http://monevator.com/compare-uk-cheapest-online-brokers/

JohnB
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Re: Splitting pensions to stay within £85k limit - suggestions?

#137141

Postby JohnB » May 5th, 2018, 5:20 pm

Monevator this week has reported that the administrators for one failed investment broker are saying they are going to dip into what we thought were ring-fenced client funds to fund the winding up. http://monevator.com/even-brokers-can-fail-you

The thread goes on to talk about risk. Few endeavour to try to keep within the £50k/provider limit, most believe 2 brokers and 2 fund providers is a good idea, for speed of access, if not eventual loss. There is discussion about 100% protection for certain types of policy.

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Re: Splitting pensions to stay within £85k limit - suggestions?

#137145

Postby Itsallaguess » May 5th, 2018, 5:41 pm

JohnB wrote:
Monevator this week has reported that the administrators for one failed investment broker are saying they are going to dip into what we thought were ring-fenced client funds to fund the winding up.

http://monevator.com/even-brokers-can-fail-you


I've just read the article, and am shocked at the £100M sum being discussed, which it's likely to cost to 'return the cash and assets held by the company, currently valued at £550m, to its thousands of private investor clients'.

Is there any justification for the £100m fee here?

It seems to be outrageous, but perhaps I'm missing something?

Cheers,

Itsallaguess

PinkDalek
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Re: Splitting pensions to stay within £85k limit - suggestions?

#137150

Postby PinkDalek » May 5th, 2018, 6:05 pm

For those who haven't studied the article, it relates to Beaufort Securities Limited (in administration), previously known as Hoodless Brennan plc and other variations:

https://register.fca.org.uk/ShPo_FirmDe ... 00MfH9TAAV

There's a couple of earlier threads on Beaufort over at Brokers and Share Dealing:

Beaufort Securities Post by 77ss » 03 Mar 2018 21:28
viewtopic.php?p=121976#p121976

Safety of Client Fund Post by UncleEbenezer » 30 Apr 2018 09:02
viewtopic.php?p=135668#p135668

mc2fool
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Re: Splitting pensions to stay within £85k limit - suggestions?

#137259

Postby mc2fool » May 6th, 2018, 2:15 pm

Itsallaguess wrote:I've just read the article, and am shocked at the £100M sum being discussed, which it's likely to cost to 'return the cash and assets held by the company, currently valued at £550m, to its thousands of private investor clients'.

Is there any justification for the £100m fee here?

It seems to be outrageous, but perhaps I'm missing something?

The up-keep cost of the liquidators' yachts, maybe? Using the FT article search link in the Monevator article and clicking on "Beaufort Securities insolvency could cost up to £100m" we read:

"In the worst-case scenario — in which the process stretches out over four years — the costs could rise to £100m, he said. This would include among other things, PwC’s fees, the cost of legal advisers to PwC, and of keeping on several staff from Beaufort to help with the process."

£100m over four years and with ~250 working days in a year that = £100,000 per day. With insolvency practitioners charging up to £800 an hour (per person) it's obviously a good thing to have a team working on -- good for the up-keep of yachts, that is!

It does sound ridiculous, however I see that if the Official Receiver does the liquidation they (the govt in effect) charges 15% of assets realised. https://www.gov.uk/government/news/chan ... ivers-fees

This case though does raise a wider point, which I think is best further discussed at PD's last link on the Brokers and Share Dealing board.

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Re: Splitting pensions to stay within £85k limit - suggestions?

#143537

Postby goRt » June 4th, 2018, 12:27 pm

swill453 wrote:Assuming your pension isn't held as pure cash, the £85K limit doesn't actually apply.

There may be other reasons not to hold all your pots with the same provider, but the £85K limit isn't one of them.

Personally, I've got no qualms about holding my entire SIPP, more than that amount, with a single provider.

Scott.


Sorry, I'm late to the party, holding large cash balances will occur from time to time for me.

Reading the iWeb T&Cs then it doesn't hold cash in separate client names, so you'll get back a pittance.
ii(i) on the other hand holds the cash in your name spread across 10-12 banking organisations (but confirms it doesn't take account of other cash you may hold with one of these).

Personally, I hate the service I receive from ii(i), but the risk with iWeb prevents my moving.


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